I'm a co-founder of NorthBridge Energy Partners, LLC., a consulting firm that helps companies connect assets to power grids. I'm also a former Senior VP of Energy Technology Services for Constellation NewEnergy, Inc., and have 20+ years of experience in the energy industry. I've written for the Boston Business Journal, Mass High Tech and several other online industry publications. I have a B.A. from Williams College and a Masters from Tufts University’s Fletcher School.

Innovation in Energy: How Do You Bring Recognition and Money To Good Ideas?

Every day, people have new ideas. The Eureka moment can happen anywhere – in the car, at the dinner table, in the laboratory. Sometimes the concepts are really good ones, and potentially disruptive. But a good idea is just that – an idea. It’s how you take that idea, how you organize around it, how you improve upon it, and how you sell it that matters. Ideas only become reality with luck, and a lot of hard work. And money. Sometimes lots of money. Especially in the field of energy.

Many readers may be aware of ARPA-E – the government funded program to launch energy-related innovation. It’s a conceptual spin-off of DARPA, the Defense Advanced Research Projects Agency, the folks who are responsible for development of new products used by the military. DARPA has been around for 50 years (since the Eisenhower Administration – as a response to Sputnik), and has brought us groundbreaking technologies such as ARPAnet (the earliest predecessor of the internet), and the Predator (the now ubiquitous unmanned drone).

ARPA-E aims to bring that same technological innovation to energy, and in 2012 funded 66 $mn of projects “aimed at advancing all kinds of transformational energy technologies.” In February, ARPA-E will host its annual summit in Washington DC, bringing together the best and brightest energy innovators to keep pushing the boundaries of what is possible.

On the first night of the February summit, Ultra Light Startups will host one of its Future Energy events sponsored by a variety of entities, including Shell as the Platinum Sponsor. Future Energy, which is a part of Ultra Light Startups, is a forum that allows energy entrepreneurs to pitch new products – technologies that may be game changers in energy and cleantech – to a group of seasoned private investors hungry for the next big energy technology.

I had an opportunity to interview Graham Lawlor, the Founder of Ultra Light Startups and Future Energy to find out more about the event, and how it helps to foster innovation. Future Energy has teamed up with Shell’s “corporate angel group” to help identify the energy companies and technologies of the future in their very earliest stages. Lawlor noted “If the company has received Series A funding, it’s already too late. We’re looking for new companies with radical technologies. A 5 or 10% incremental change is not enough. We are looking for the game changers.”

“These companies might be in energy efficiency or in the renewables space, but they might also be in oil and gas. For example, they may have a technology for cleaning water from gas fracking.” Future Energy and Shell will consider software, so-called “clean web,” but the main focus is on hardware.

Their goal is to create the awareness and exposure, sort of a “Shark Tank” (the ABC show where entrepreneurs do their best to convince investors that their new gizmo is worth millions), but with a key difference. “Shark Tank focuses on inventors with consumer products that can be widely understood. The latest fracking water cleaning technology will not drive a huge audience.” But it might – pitched to the right audience – revolutionize a portion of the energy industry ripe for change, and bring millions to the inventor.

Ultra Light’s and Future Energy’s job is to shine light on the concepts, not to fund them. Lawlor makes clear “We are not the funding platform. The value we provide is in getting exposure for the idea and in getting feedback from the potential investors. We have a range of connections to funding sources, and ties to the two largest greentech accelerators, Surge (in Houston) and Greenstart (Silicon Valley).”

Ultra Light has been doing this for five years, and the results have been steady. Two companies (who cannot yet be named) were funded coming out of Future Energy events last year. They’ve also done the same thing for internet start-ups such as Pixable (a three year old photo-sharing MIT start-up acquired last year by Singapore Telecom for 26.5) “who pitched twice at our events before getting funding.” A number of other companies, such as USEED, CityMaps, and Tapfame have benfited from this approach as well.

Lawlor feels confident in the value of the forum he provides “Companies that finish in the top two or three, you can generally bet they are going somewhere.” The main thing investors look for in a company – besides an intriguing idea that may gain traction – is the team. “Smarts is essential, but having a team that has already produced something together is more compelling, especially if they’ve done something of note.” Lawlor commented “for example, the ‘PayPal mafia’ (the alumni from that company) just keep inventing.”

So why team up with Shell Oil in the ARPA-E forum? Why have an established energy company in the hunt for disruptive technology? “Capital is tough to come by. Venture capital – in particular – wants something that is highly capital-efficient. And there’s a role for that. But with Shell, we can facilitate a balance between entrepreneurs and corporations with a longer-term view, more patience, and deeper pockets.”

Lawlor’s business model works, since “Large corporations increasingly see startups as a primary source of their innovation and growth… we have the largest pipeline of early-stage startups. We come across the most innovative startups before anyone else does, and companies like Shell, Amazon, Microsoft, Samsung, and New York Life pay us for this access.”

Where does Lawlor see this all going? One element is more involvement with social media and the masses. He looked at the Kickstarters of the world and thought there might be some application to energy innovation as well. So he put together a site for individuals to both get exposed to and vote on their favorite new technologies. It’s a crowd-voting platform that is scalable and independent of physical in-person events, with an international reach. Crowd-voting may not lead to funding of cold fusion, but it is just one more way for innovative ideas to come to light in a networked world.

As far as the future of energy is concerned, there is unprecedented potential for innovation: we are bringing new ideas and technologies to the market more quickly than ever before. An effervescent brew of better ideas, technologies, instantaneous communications, and pervasive IT – the internet of things – has the potential to bring radical and disruptive change. Entities like ARPA-E and Ultra Light Start-Ups serve to increase the velocity of that change, by exposing good ideas to financial backing and experienced management.

In part, this is why we are likely to start seeing a shift from long-term and highly capital-intensive investments like coal plants and nuclear power to an increasing number of bets on smaller, modular, and more flexible technologies. With increased levels of innovation, technology deployment, and market volatility, a higher premium can and should be placed on optionality. New ideas are not going to stop coming. And if Ultra Light, ARPA-E and investors have their way, increasingly large numbers of these potentially disruptive ideas and inventions will find their way to market in ways we haven’t yet begun to fathom.

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